Tuesday, July 10, 2012

So Freaking Obvious (SFO)

July 9
2012

I have
long argued, until my throat is raspy and raw from rudely calling people
"imbeciles", "halfwits" and "low-life morons",
that facts and figures don't lie, and from them one learns, to one's paralyzing
horror, that We're Freaking Doomed (WFD).

Of
course, being brought up on a steady diet of television and movies, I always
thought that the world would end with an invasion from outer space, maybe with
aliens sucking our blood for the hemoglobin or invading our brains so that we
become slaves, and the best we can hope for is to be ruled by beautiful
hot-looking young women running around in skimpy outfits, as sometimes happened.

More
probably, though, the end of the world would be fire-breathing monsters rising
up from beneath the ocean, going on a murderous worldwide rampage after
succeeding, where all other monsters have failed, in finally destroying Tokyo
by stomping all over it and burning it up with laser beams shooting out of
their eyes --zzzt!-- and we, hopefully, somehow, end up getting
ruled by hot-looking babes parading around in high-heel shoes and very skimpy
outfits.

It was
only when I grew older that I learned, with a certain joylessness about the
relative lack of pretty girls in skimpy outfits in the real world, of the actual
reason why we are all inescapably doomed: A central bank creating so much money
and credit over the years that the entire fabric of the economy changes into a
disgusting mutant economy, everything horribly twisted and distorted, totally
dependent upon government spending, riddled with corruptions, pandemic
mal-investments and constant inflation in consumer prices.

Of
course, I may be wrong in my cheery optimism, and it could be far, far worse.

Did I
say "could be" worse?Hahaha!
That just shows you what a wonderful, delightful sense of humor I have!How
come nobody likes me and are all out to get me?

The
truth is that it WILL be worse! Much worse! Unimaginably worse! Hahaha!

Notice
how I bravely laugh in the face of disaster! Hahahaha! My arrogant bravado is
real this time, and not like that time I lied when I said "Baby, I don't
care if your dad catches us, just gimme some of that hot monkey love!"

Well, it
turns out that I did not laugh when her dad actually caught us, but I laugh now
because I know what is going to happen because the demonic central banks of the
world are creating insane amounts of money and credit, on top of the staggering
mountains of money, credit and debt they created over the decades, in yet disastrously
more of their ridiculous and preposterous neo-Keynesian quackery.

And
because I know what is going to happen, I am naturally hunkering down with some
serious weaponry and a "don't trust anyone" attitude, hoarding gold,
silver and oil, which gives me the courage to laugh the aforesaid laughs at the
similarly aforesaid preposterous monetary crap of the Federal Reserve, the
aforesaid idiotic foreign central banks for the same reason, and the laughably-inept
and deeply-corrupt aforesaid federal government.

Few
others will laugh, however, as they are, one-by-one, busted-out by inflation, and
are finally reduced to scratching around in the dirt looking weeds and bugs to
eat.

And
their complete lack of humor about starving to death will be because they did
not buy gold, silver and oil in reaction to all the inflation in consumer
prices, which is what I typically screech about in absolute horror, that will
be caused by all that new money and credit created for the last half-century by
the evil Federal Reserve, and still being created to the tune of trillions of
dollars a year today.

Even
worse, as in "making my guts crawl with horror," most of all those
trillions of dollars created by the Federal Reserve were borrowed by the
federal government, to be deficit-spent by one idiotic Congress after another,
until we are now bankrupted from accrued debt, which is assuming nothing bad
happens, which it will.

Now,
bankrupted is one thing, but inflation is quite another, and so let us take a
look at an essay titled "Deflation - Nowhere To Be Seen" by Adrian Douglas
of Market Force Analysis.

He has looked at the Continuous Commodities Index over the
past ten years, and found that "in examining price trends, the U.S. is
experiencing shocking price increases" in prices.

Indeed, as his chart shows, the CCI was at about 200 in
2002, and at 550 in the middle of 2012, which is a rise of 275%!In ten years! Ten Lousy Years (TLY)!

This 275% rise in
prices over a short ten years calculates out to a mind-blowing, yearly, compounded
inflation of 10.65%!The Rule of 72 says
that prices will double in less than 7 years!

As completely astounding and as morbidly terrifying as it
is, I scream in yet more terror that the CCI at 550 is still lower than a
cyclical peak of about 640 reached 2008, and another peak of about 680 in 2011!!

Please notice the use of two exclamation points to indicate
particular emphasis.This obviously
means something, and the presence of two exclamation points cinches it! This is Bad News Aplenty (BNA)!

But what is the BNA? Switching to a snotty, sarcastic tone, I
say "In case you are new around here and ain't heard, or are
brain-damaged, it means We're Freaking Doomed (WFD), ya moron! Hahahaha!"

Like a drowning
man clutching at straws, you nervously ask "So what is the CCI? Maybe
there is something wrong there! Maybe this is not as hopeless as it looks, and
the Mogambo is a big fat stupid jerk for being afraid of nothing! Id' love
that!"

I'm glad you asked
that question instead of asking me one that I can't answer because either I
don't know the answer or I am pleading the Fifth, as in answering the query "Where
in the hell were you until two o'clock in the morning?"

In this case,
thanks to your fortuitous question, I can just cut and paste the answer from
Mr. Douglas's essay, which is that "The CCI is an index of 17 different
commodities namely: Cocoa, Coffee ‘C’, Copper, Corn, Cotton, Crude Oil, Gold,
Heating Oil, Live Cattle, Live Hogs, Natural Gas, Orange Juice, Platinum,
Silver, Soybeans, Sugar No. 11, and Wheat."

As to your
question about "Maybe something is wrong with the way the index is
calculated, and it makes things just look bad, and so Mogambo is a big fat
stupid jerk after all!", Mr. Douglas deftly anticipates it, and punctures
your slim hope by explaining that "The index is equally weighted so it is
the geometric mean of these 17 commodity prices. This means that the price of
the CCI cannot spike due to an increase in price of just one or two
commodities. For the index to rise 10% all 17 components would need to rise 10%
or one component would have to rise 500%. If oil were to rise tomorrow to
$400/bbl and all other 16 components did not change in price, the index would
only rise by 10%."

His next sentence
is the one that should send you screaming in terror, jumping into your car,
careening wildly down the street to buy more gold, silver and oil.

He says "This
means that the CCI is a stable indicator of price trends."

Buying gold,
silver and oil in the face of price inflation of more than 10% year, and in the
face of yet more rampant, irresponsible, insane amounts of money-creation by
the Federal Reserve and the other central banks of the world, is So Freaking
Obvious (SFO) that one can only chortle with unrestrained glee, happily chanting
"Whee! This investing stuff is easy!"

2 comments:

I always look to The Mogambo Guru for cheerful financial news (CFN). Then, after reading it, I call my doctor for anti-depressant pills (ADP). But my doctor will no longer answer my calls, and the pharmacist has banned me from the drug store. The investing stuff may be easy, but We're (still) Freaking Doomed (W(s)FD)!!

About Me

The Mogambo Guru
Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning , and other fine publications. For podcasts featuring the Mogambo.